I was catching up over breakfast with a friend who’s now CEO of his own startup. One of the things he mentioned was that when it came to decision-making he still tended to think and act like an engineer. Each and every decision he made was carefully thought through and weighed. And he recognized it was making his startup feel and act like a big ponderous company. 74HGZA3MZ6SV

Speed = Execution Now

General George Patton said, “A good plan violently executed now is better than a perfect plan next week.” The same is true in your company. Most decisions in a startup must be made in the face of uncertainty. Since every situation is unique, there is no perfect solution to any engineering, customer or competitor problem, and you shouldn’t agonize over trying to find one. This doesn’t mean gambling the company’s fortunes on a whim. It means adopting plans with an acceptable degree of risk, and doing it quickly. (Make sure these are fact-based, not faith-based decisions.) In general, the company that consistently makes and implements decisions rapidly gains a tremendous, often decisive, competitive advantage.

Decision Making Heuristics for the Startup CEO

The heuristic I gave my friend was to think of decisions of having two states: those that are reversible and those that are irreversible. An example of a reversible decision could be adding a product feature, a new algorithm in the code, targeting a specific set of customers, etc. If the decision was a bad call you can unwind it in a reasonable period of time. An irreversible decision is firing an employee, launching your product, a five-year lease for an expensive new building, etc. These are usually difficult or impossible to reverse.

My advice was to start a policy of making reversible decisions before anyone left his office or before a meeting ended. In a startup it doesn’t matter if you’re 100% right 100% of the time. What matters is having forward momentum and a tight fact-based feedback loop (i.e. Customer Development) to help you quickly recognize and reverse any incorrect decisions. That’s why startups are agile. By the time a big company gets the committee to organize the subcommittee to pick a meeting date, your startup could have made 20 decisions, reversed five of them and implemented the fifteen that worked.

Once you learn how to make decisions quickly you’re not done. Startups that are agile have mastered one other trick – and that’s Tempo – the ability to make quick decisions consistently over extended periods of time. Not just for the CEO or the exec staff, but for the entire company. For a startup Speed and Tempo need to be an integral part of your corporate DNA.

[…] in Entrepreneur, VC, decision making. trackback Steve Blank had a great post last week about speed and tempo in startup decision making recently where he says: … think of decisions of having two states: those that are reversible […]

Great post, Steve. And nice site. It looks as though you and I have the same taste in layout, no? I’ve written about this subject many times and could not agree more. Too often, CEOs and small business managers suffer from analysis paralysis. This happens for any number of reasons. Some are afraid of making the wrong decision. Others feel it’s necessary to know ALL the variables before making a decision and executing. The problem is that you can check the pool’s thermostat all day long but you’re never going to know just how warm the pool is until you take the plunge.

Your Hueristics are at the core. I love the way you differentiate. Those things that aren’t irreversable not only allow you to “redo” but also allow you to benefit from the learnings that got you there. Sometimes, it’s the failures or mistakes that lead to the successess.

[…] to see if they need to make a Pivot to find a better model. If they believe one is necessary, they do not hesitate to make the change. The search for a profitable and scalable business model might require a startup […]

[…] to see if they need to make a Pivot to find a better model. If they believe one is necessary, they do not hesitate to make the change. The search for a profitable and scalable business model might require a startup […]

[…] without a single person in charge, find that’s the fastest way to go out of business. Speed, tempo and fearless decision-making are a startups strategic advantage. More often than not, conditions on the ground will change so […]